Opposition upset as government passes budget pact

The opposition has turned its guns on the government over the latest savings package.

The Social Democrats (SPÖ) and the conservative People’s Party (ÖVP) hope to save around 28 billion Euros in the coming years thanks to the budget consolidation pact. The package was passed in parliament yesterday (Weds). The opposition did not approve the 98 draft bills while the coalition partners teamed up to make the measures legally effective.

Some of the various tax increases and spending cuts will come into force next month but most of the measures will be felt only in 2013 and later. The opposition criticised this aspect since the current government may not be in office after next year’s federal election.

Josef Bucher, who heads the Alliance for the Future of Austria (BZÖ), said the budget package consisted of little more but empty bubbles. Bucher said he felt reminded of German pop singer Nena’s number one hit from 1983, “99 Luftballons” (99 Red Balloons), by the 98 steps of the coalition while Freedom Party (FPÖ) leader Heinz-Christian Strache asked the government whether it was not embarrassed at all about the “poorly planned” package.

Strache – who deplored upcoming pension cuts – underlined that chances for a tax on financial transactions in Europe slid dramatically a few days ago due to statements by Wolfgang Schäuble of the Christian Democratic Union (CDU). The German finance minister suggested to abandon the fight for the introduction of such a levy due to widespread scepticism concerning its efficiency.

SPÖ Chancellor Werner Faymann and ÖVP Vice Chancellor Michael Spindelegger said yesterday they were determined to continue the search for European partners despite the U-turn of the German government. Spindelegger said none of the opposition’s concepts were any better than the strategy of his party and its coalition partner. He vehemently defended the fiscal course for the coming years.

Strache and other opposition politicians criticised the coalition for considering possible earnings from such a tax in the annual budgets of the coming years despite great uncertainties about whether there will ever be a cross-country charge on stock market operations and financial transfers.

Greens chairwoman Eva Glawischnig appealed to the ÖVP to “call up your sister party”. Glawischnig said the Austrian conservatives should ask their German counterparts to argue their decision to pull out from working on the creation of a tax on financial transactions. The Greens also criticised the new budget consolidation package as socially unbalanced. They said too few of the planned measures would help to carry out structural reforms with long-term savings effects.

One of the less controversial aspects is a temporary income tax increase for people with comparably high wages. Furthermore, Austrians will have to pay a 25 per cent tax on the profits made by selling real estate. Such procedures are currently tax-free if the properties were acquired 10 years or more before the sale.

A survey shows that most Austrians (52 per cent) consider the SPÖ-ÖVP government coalition’s fiscal agreements as unfair. OGM spoke with around 500 Austrians. The research agency said that fewer than one in three (30 per cent) of them were of the opinion that burden was shared in a fair way.